Sacramento U.S. Attorney Benjamin Wagner shows how defective mortgages were bundled into securities as he discussed record $13 billion settlement with JPMorgan Chase on Nov. 19 / Rich Pedroncelli, AP

by Kevin McCoy, USA TODAY

by Kevin McCoy, USA TODAY

Major U.S. banks may have to pay an additional $105 billion to settle mortgage-related issues on top of the billions in earlier settlements, according to a new estimate by ratings agency Standard & Poor's.

The costs are expected to stem from continuing legal actions against banks for their involvement with soured residential mortgages they originated or repackaged into securities and sold during the 2005-2008 run-up to the nation's financial crisis, S&P's analysis showed.

"We estimate that the U.S. banking industry may need to pay out an additional $55 billion to $105 billion to settle mortgage-related issues, some of which is already accounted for in (banks' legal) reserves," the report estimated.

The analysis was based on S&P's review of previous settlements and unresolved mortgage-related legal actions against Bank of America, Citigroup, JPMorgan Chase, Goldman Sachs, Morgan Stanley and other major banks.

Despite the high price tag, the analysis estimates banks faced with the largest legal exposure should be able to fund the settlements because they have "significant earnings power" and have remained profitable while paying earlier mortgage-related costs.

The major banks collectively have an estimated $155 billion buffer composed of a capital cushion, representation and warranty reserves and funds set aside for litigation, S&P said.

The anticipated costs have already been factored into S&P's bank ratings and currently are not expected "to result in negative rating actions for U.S. banks," the analysis said.

However, S&P added that any immediate and unexpected major legal expense related to mortgage issues could weaken a given bank's business model and capital position through potential loss of key clients and employees.